2of2Refineries along the Houston Ship Channel and elsewhere soon will begin fall maintenance that could cut U.S. crude oil demand by 1.3 million barrels a day. (AP Photo/David J. Phillip, File)Photo: David J. Phillip, STF

Now that the international community plans to lift the embargo on Iranian oil, it's time for Congress to lift the one on U.S. oil.

For 40 years, the United States has banned almost all exports of U.S. crude in the mistaken belief that energy independence is the same thing as energy security. The result is that U.S. oil companies are forced to sell their product at a substantial discount to prevailing international prices to U.S. refiners who then export gasoline, diesel and jet fuel at a significant profit.

Congress needs to repeal this misguided federal ban so that U.S. crude can become another source in the international marketplace and diminish the power of OPEC, and Iran in particular, from manipulating it. Depending on how quickly the agreement is implemented, Iran could add 250,000 barrels a day early next year to the global market and add a million more barrels in three years.

When a nation that many lawmakers consider an enemy can sell crude more easily than Texas, there is something wrong in Washington.

There are lawmakers who understand the imperative. Rep. Joe Barton, R-Texas, and Sen. Lisa Murkowski, R-Alaska, are leading the battle to lift the ban, but they are finding that too many Americans, including members of Congress, believe some old myths that need to be dispelled once and for all.

First, many Democrats believe that allowing oil exports will increase the price of U.S. gasoline. While that may sound logical because exports will likely raise the price of American crude while lowering the price of foreign crude, the truth is that U.S. refineries have never given Americans a discount.

"The global oil price is what sets the price of gasoline," explained Anthony Starkey, energy analysis manager for Bentek Energy, an analytics and forecasting unit of Platts. "U.S. refiners already produce above and beyond what U.S. consumers need or demand. ... We already export our crude, we just do it through the refined product market."

In fact, several studies show that adding U.S. supply to the market will bring down international prices, and therefore bring down U.S. gasoline prices.

The second myth is that we can keep U.S. oil within our borders and stop importing oil from elsewhere and achieve energy independence. This survivalist view is strong in the more paranoid corners of the Republican Party. It's also out of touch with reality.

1973 embargo

Advocates of energy independence point to the OPEC oil embargo in 1973 as proof of America's vulnerability. But since then, the market has become much more fractured and sophisticated. Arab members of OPEC once controlled the majority of the world supply, but now they manage only about 25 percent. The U.S. also doesn't buy that much from them anymore.

If Arab countries decided not to export to the U.S., it would drive the price up a little bit, but there are plenty of other sources that would keep us supplied. That is called energy security, and the more suppliers in the market, the better for us.

West Coast refineries can buy crude from Canada, East Coast companies can buy from Africa and the Middle East and Gulf Coast refiners can buy from Texas and Latin America.

There are also thousands of grades of oil and petroleum products. We need some types of foreign heavy oil, and we have too much light, sweet crude. We need to trade, and the ability to buy the right kind at the best price from the right supplier is what makes free markets great.

The export ban distorts the market.

"If it makes sense for shale producers to sell to the domestic market, then they can and should," Starkey said. "If it makes more sense to sell to the international market, then they should."

Bentek produced a white paper this year explaining that U.S. refineries can take only so much U.S. oil because they are configured for heavier foreign oil. That means U.S. oil is going into storage while refiners import heavier grades to keep operating.

Profit margins

U.S. refiners are processing more barrels per day than at anytime since 1982, reaching near maximum capacity and registering the largest profit margins in more than a decade, according to Bloomberg News. Holding a monopoly on refining American oil has been a windfall for these companies, and they are leading the fight against exports.

A lobby group called Consumers & Refiners United for Domestic Energy is working hard to keep the ban in place, rallying the Republican-leaning owners of the refineries and the Democrat-leaning Steelworkers who operate them. Their main tactic isn't to defend the distorted market but to obfuscate and delay.

"The export issue is so complex, with so many ramifications, and such a lack of broad consensus on both a regional and partisan basis, now is simply not the time to consider repealing our long-standing energy independence law," the group says, touting the benefits of keeping U.S. oil prices low.

The problem is that low prices are killing U.S. drilling. The Energy Information Administration reports that shale drillers cannot generate profits at current prices and U.S. production will soon drop.

If we want to keep the industry alive, we need to let it sell to the international market and generate higher revenues.

Markets are complex, and trying to manipulate them is foolish. That's why we must lift the export ban and let capitalism work. It will make our oil industry stronger and the global energy market more secure.

Chris Tomlinson has written commentary on business, energy and economics for the Houston Chronicle since 2014. Before joining the Chronicle, he spent 20 years with The Associated Press reporting on politics, conflicts and economics from more than 30 countries in Africa, the Middle East and Europe. He’s also the author of the New York Times bestseller Tomlinson Hill, and he produced the award-winning documentary film by the same name. Both examine the history and consequences of race, politics and economics in Texas.